The announcement came on a major day of upheaval in the telecoms industry which saw a set of so-called ‘Cameron cronies’ installed in top jobs at TalkTalk and Dunstone’s other firm Dixons Carphone, owner of PC World and Currys.

Harding, 49, one of the most powerful women in British business, quit as TalkTalk chief executive 15 months after the company was rocked by a devastating cyber attack. The mother of two, who was at Oxford University with David Cameron and was made a Conservative peer by the former prime minister in 2014, will step down in May.

Her departure follows criticism of her handling of a cyber attack which saw the personal data of 157,000 people stolen – including bank account details in nearly 16,000 cases – and cost the company £60m. At one stage it was feared the personal and financial details of as many as 4m customers had been hacked.

Harding is being replaced by Tristia Harrison, 43, who is currently managing director of TalkTalk’s consumer division.

But the real power will lie with billionaire entrepreneur Dunstone, the founder of TalkTalk and its current non-executive chairman, who is stepping up to become executive chairman.

Explaining his new hands-on role, the 52-year-old – who also held the post of chairman at Dixons Carphone – said: ‘We have a great new team here but they haven’t run a public company before so I really need to step up and help them.

‘Having founded the business, you could never say that I was a non-executive, could you?’

After the cyber attack in 2015, TalkTalk was fined a record £400,000 for poor website security by the Information Commissioner who branded the hacking debacle a ‘car crash’.

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But despite this, Harding, who is married to Tory MP John Penrose, will leave with TalkTalk shares worth £7.6m and 12 months’ pay of £550,000. She insisted the hack was not the reason for her departure.

‘It has nothing at all to do with the cyber attack,’ she said. ‘That’s ancient history. Our customers and the business have moved away from it. Customers trust TalkTalk more than they did before the cyber attack.’

But City commentator David Buik, an analyst at stockbroker Panmure Gordon, said: ‘I’m not sure she ever recovered from the hacking. The buck stops at the top.’

Harding was paid £2.8m in the 12 months to March 2016 as her £550,000 basic salary was topped up with shares, bonuses and other awards. Last year’s pay took her total earnings since TalkTalk listed its shares on the stock market in March 2010 to £18.2m – an average of more than £3m a year.

Shares in TalkTalk rose from 126p when they joined the stock market to a high above 400p in June 2015, just months before the cyber attack. But they were worth just 156.5p by the close of trading on Tuesday night before Harding announced she was leaving. News of the shake-up sent shares 7.6 per cent higher to 168.4p yesterday.

Her exit has sparked a bizarre game of musical chairs at TalkTalk and its former owner Dixons Carphone. Dunstone, who founded Carphone Warehouse 27 years ago and is a friend of Cameron, will relinquish his chairmanship of Dixons Carphone after taking over the reins at TalkTalk.

He has a 31 per cent stake in TalkTalk worth £495m and a 12 per cent holding in Dixons Carphone worth £421m.

Former BT boss Lord Ian Livingston, currently deputy chairman of Dixons Carphone, will replace Dunstone as chairman. Like Harding, he was made a peer by Cameron.